Barry Wood wants to buy a used car that costs $5000. He has two possible loans in mind. One loan is through the car dealer; it is a three-year add-on interest loan at 6% andrequires a down payment of $300. The second is through his credit union; it is a three-year simple interest amortized loan at 7.5% and requires a 10% down payment.(a) Find the monthly payment for each loan. (Give your answer to the nearest cent.)Dealer$Credit Union $(b) Find the total interest paid for each loan. (Give your answer to the nearest cent.)Dealer$Credit Union $

According to the given information, find the following monthly payment and total interest paid.

Answered: Barry Wood wants to buy a used car that…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

If I'm buying a car and I can only afford up to 600 for my monthly car payments but the dealer is charging a 6.9 interest loan for 7 years what would be the largest loan amount that I could take out to buy a car
I am hoping to buy a new car. The new car that I am hoping to buy costs $27500. I anticipate that the dealer will give me a $3000 credit for trading in my old car, which will reduce the amount that I will need to finance. I am planning on financing the car for 4 years at 3.25%. a. Using the above information, determine the amount of my monthly car payment. After hearing that my car payment will be the amount indicated in part a, I ask the dealer how much my payments would be if I finance the car for 6 years. This makes the car more affordable. b. Determine the monthly payments if I finance the car for 6 years instead of 4 years. c. We all know that even though the payment amounts are lower if I extend the years of the loan, I will pay more in finance charges over time. How much more money would it cost me over the life of the loan if I finance the car for 6 years instead of 4 years?
Desmond plans to purchase a new car. He qualifies for a loan at an annual interest rate of 5.2%, compounded monthly for 8 yr. He is willing to pay up to $300 per month. What is the largest loan he can afford? What is the correct formula for this situation? *** A. P OC. A= nt r n <-1 Desmond can afford a loan up to $ (Round to the nearest cent as needed.) OB. OD. A= r n nt -1 r n
It does not have to be a long explanation.
David is planning to buy a new car. Since David has not save any money, he plans to take out a loan to pay for the car. He is able to finance $43,950 with a 5 year loan. The loan has a APR of 3.25% compounded monthly. Round answers to two decimal places a. What is the minimum payment amount David will need to make for his car loan? b.How much will David pay altogether over the life of his car loan?
Sam can afford to spend $500 per month on a car. He figures he needs half of it for gas, parking, and insurance. He has been to the bank, and they will loan him 100% of the car’s purchase price. (Note: If he had a down payment saved, then he could borrow at a lower rate.) (a) If his loan is at a nominal 12% annual rate over 36 months, what is the most expensive car he can purchase? (b) The car he likes costs $14,000 and the dealer will finance it over 60 months at 12%. Can he afford it? If not, for how many months will he need to save his $500 per month? (c) What is the highest interest rate he can pay over 60 months and stay within his budget if he buys the $14,000 car now?
Chuck Wells is planning to buy a Winnebago motor home. The listed price is $185,000. Chuck can get a secured add-on interest loan from his bank at 7.35% for as long as 60 months if he pays 15% down. Chuck's goal is to keep his payments below $4,300 per month and amortize the loan in 42 months. (a) Find Chuck's monthly payment (in $) with these conditions. (Round your answer to the nearest cent.) $ 4257.64 × Can he pay off the loan and keep his payments under $4,300? Yes, under these conditions, Chuck will meet his goal. No, the monthly payment is too high. (b) What are Chuck's options to get his payments closer to his goal? (Select all that apply.) □ □ □ □ □ make a lower down payment try to bargain for a lower sale price make a higher down payment try to negotiate a higher interest rate try to bargain for a higher sale price try to negotiate a lower interest rate
Chuck Wells is planning to buy a Winnebago motor home. The listed price is $175,000. Chuck can get a secured add-on interest loan from his bank at 7.45% for as long as 60 months if he pays 15% down. Chuck's goal is to keep his payments below $4,100 per month and amortize the loan in 42 months. 1) Chuck spoke with his bank's loan officer, who has agreed to finance the deal with a 6.95% loan if Chuck can pay 20% down. What will Chuck's new monthly payment (in $) be with these conditions? (Round your answer to the nearest cent.) $ With these conditions, will Chuck be able to pay off the loan and meet his goals? Yes, under these conditions, Chuck will meet his goal.No, the monthly payment is too high. 2) Attempting to reduce his monthly payment further, Chuck continues to negotiate with the seller. If the seller agrees to reduce the listed price by $4,800, finance the deal with a 6.95% loan, and if Chuck pays the 20% down, what will Chuck's monthly payment be (in $)?…
John is looking for a new car. He has a down payment of $1,000.00 and wants to pay $350.00 per month for 5 years. The best deal he found for an amortized loan is his local bank, at a rate of 2.65%. What is the highest price car he should consider buying?
John and Chelsea decide they would like to buy furniture. They choose items that amount to $5600.00. The store has 2 fixed installment simple interest loan options for purchasing: Option 1: 20% down payment and financing at 5% simple interest per year for 3 years. Option 2: no down payment and financing at 5.25% simple interest for 4 years. Which option will result in smaller finance charge (interest)? What will that finance charge/interest be? Which option will result in the smaller monthly payment on this fixed installment loan? What will that monthly payment be? They decide to defer any purchases and invest a $5600 bonus that Chelsea will be getting from work in a savings account. The interest rate is 1.8% compounded every month. How much interest will they earn in 4 years? They decide to defer any purchases and loan the $5600 bonus to a needy relative at 5% simple interest per year. How long will the term of the loan need to be if they want to earn $500…
Miguel can afford to pay $100.00 per month for a car. He has $6,000.00 saved up for a down payment. His bank is offering amortized car loans for 1.375% compounded monthly. If he takes out a 5-year loan, what is the price of the most expensive car he can afford? How much will the car cost him in total?
Dan is contemplating trading in his car for a new one. He can afford a monthly payment of at most $500. If the prevailing interest rate is 2.4%/year compounded monthly for a 48-month loan, what is the most expensive car that Dan can afford, assuming that he will receive $6000 for his trade-in?

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS